In general terms, is it possible for shares of a holding company to qualify as "excluded shares"?
CRA indicated that the definition of excluded shares should generally not include the shares of a Holdco, because all or substantially all of its income would be derived from a related business with respect to the individual. Any income or taxable capital gains from the disposition of such shares will not be an excluded amount and will be split income of the individual subject to TOSI unless another exclusion applies, for example, if the related business is itself an excluded business.
Where this or other safe harbours do not apply in a particular case, the determination of whether the income of a specified individual from a related business should be excluded from split income treatment generally should be based on a general test of whether the amount received is a reasonable return according to the specific factors applicable in the circumstances, which include the work performed, properly contributed in support of the business, the risks assumed by the specified individual or related individual, prior amounts received by or in respect of the business, and any other relevant factor.